MOSCOW, Feb 11 (Reuters) - Group of 20 policymakers have an
ideal chance in Moscow this week to ponder whether monetary
policy largesse will blunt their will to carry out the economic
reforms needed to put global growth on a sustainable footing.

On their drive from the airport to the city centre, down
highways clogged with luxury cars, it may dawn on finance
ministers and central bankers that Russia, this year's G20 host,
got there first.

Some will check in to the five-star Ritz-Carlton hotel near
the Manezh, the former 19th-century cavalry stable by the
Kremlin walls where they meet this weekend. But convenience
comes at a price: almost $17,000 per night for a luxury suite.

The world's largest oil producer has, through much of the
Vladimir Putin era, been minting money as its central bank
bought up hundreds of billions of export petrodollars, and the
government spent its way out of the 2009 slump.

But the side-effects -- political complacency, declining
competitiveness and a misallocation of capital towards
conspicuous consumption and prestige projects -- increasingly
outweigh the benefits to Russia's $2.1 trillion economy.

Some economists say Russia's story could foretell the
outcome of ultra-loose monetary policy in the United States,
Britain, Japan and symbolised by European Central Bank President
Mario Draghi's vow last July to do "whatever it takes" to see
the euro through its debt crisis.

"Russia has oil; Europe has Draghi," Tim Ash, the
London-based head of emerging markets research at Standard Bank,
said on a recent trip to Moscow. "Europe is catching up to all
the problems that Russia has done nothing about for the past
decade."

Others say that may be stretching the point but there are
certainly signs that the zeal for major economic and regulatory
reforms in Europe has faded somewhat since Draghi took the sting
out of the debt crisis.

CURRENCY WARS

The G20 accounts for 90 percent of the world's economy and
two-thirds of its population. Russia has taken the helm this
year as the group has split between borrowers seeking to grow
out of a debt trap and surplus countries keener on austerity.

Gone is the shared sense of purpose that embodied the G20
summit in London of 2009, which created a huge financial
backstop to stem the crisis that resulted from the collapse of
Wall Street investment bank Lehman Brothers.

"The G20 has really struggled in the past couple of years
after its really great 2008 and 2009," Jim O'Neill, the outgoing
chairman of Goldman Sachs Asset Management and leading emerging
markets economist, told Reuters.

"It's already desperately searching for an identity."

Russia, holder of the world's fourth-largest gold and
foreign exchange reserves, also finds itself on the barricades
in an as yet merely rhetorical "currency war" after its central
bank accused Japan's new government of protectionist monetary
policy.

But, G20 sources and economists say, officials are likely to
tone down their rhetoric over competitive currency devaluations.

"I don't see how anybody can complain. Washington is keeping
quiet because that's what it has done for the past 30 years,"
said O'Neill.

SUPPLY VS DEMAND

For its G20 presidency, Moscow has drawn up an agenda
focusing on jobs and investment, improved financial regulation
and deficit reduction that is enthusiastically backed by the
International Monetary Fund and World Bank.

But in a world suffering a dearth of demand, there is likely
to be pushback, again led by the United States, against Russia's
push for "binding and realistic" goals to cut borrowing.

A target set at the G20's Toronto summit in 2010 to halve
budget deficits expires this year, and one G20 source told
Reuters there could be heated debate as the euro zone's dominant
economy, Germany, calls for new deficit targets to be set.

Here, at least, Russia can show some leadership by pointing
to its own balanced budget, and its adoption last year of a
so-called fiscal rule intended to reduce the dependence of its
public finances on oil and gas revenues.

"Russia's agenda reflects their own policy preoccupations.
To the extent that it is relevant to a broader global forum,
that will be a fluke," said Christopher Granville, managing
director of Trusted Sources, an emerging markets consultancy.

"But it's not an agenda that's way off in outer space."

Policymakers will hope to set aside friction between Russia
and the West over trade and human rights during the build-up to
this September's G20 summit in St Petersburg, given the forum's
focus on economic issues.

Russia, a country of more than 140 million people, says it
is up to the task of leading the G20, not least thanks to its
experience as half of the 'G2' that once dominated global
diplomacy during the Cold War.

"It's used to thinking kind of big," said Russia's top
financial diplomat, summit 'sherpa' Ksenia Yudayeva.

But things may be more tricky next year, part two of a
double-header, when Russia chairs the G8. Moscow is the odd one
out in what Granville calls "a group of like-minded Western
countries with Japan as an honorary member".

Putin, elected for a third term as president last March
after four years as prime minister, has made international
summits and sporting events an important part of his development
agenda for Russia.

He will host the G8 summit in the summer of 2014 in Sochi,
the venue of the next Winter Olympics, and hosts the World Cup
soccer finals in 2018.

Russia expects to spend $50 billion on preparing for the
Sochi Games, a sum that would make it the most expensive
Olympics. That is progress at a high price.